Read the following carefully and answer the next five questions:
G, K and B were partners running a partnership for last 10 years, sharing profit and loss in the ratio of 5:3:2. Post Covid, their firm was affected badly and started incurring losses. On 31st March, 2023 they all decided to dissolve the firm due to continuous losses. Their capital balances were ₹ 4,00,000, ₹3,00,000 ₹2,00,000 respectively. Firm had liabilities ₹80,000, Cash ₹40,000 other Sundry Assets ₹8,50,00 and P&L A/C constituted the rest. Assets realised at 80% and liabilities were paid in full. There was unrecorded liability of ₹50,000 which was settled at ₹40,000. Realisation expenses amounted to ₹30,000, being paid by G on behalf of the firm.
What is the mode of dissolution of the firm followed by G, K and B ?
G, K, and B mutually decided to dissolve their firm due to continuous losses, indicating a dissolution by agreement. This mode involves all partners agreeing to terminate the partnership, which fits the scenario described.
Existing Profit and Loss Account in the books of the firm will be shared/borne by partners in the old ratio i.e., 5:3:2.
English
50 Questions
200 Marks
45 Mins English